§ Mr. BellinghamTo ask the Secretary of State for Trade and Industry what research her Department has conducted into the effects of late payments on small businesses; and if she will make a statement. [168984]
§ Nigel GriffithsSpecific research into the effects of late payment has not been carried out because this government has always recognised that late payment of debts can have serious effects on the cash flow of smaller companies, which is why we had a manifesto commitment to introduce a Late Payment Act to allow small businesses to
claim interest on late payment from other business or public sector bodies, allow creditors to claim a fixed sum of compensation to cover debt recovery costs should late payment happen. Compensation entitlements are: £40 for a debt of up to £999.99, £70 for a debt of between £1,000 and £9,999.99 and £100 for amounts over £10,000.This package of measures has had a positive effect on payment times. The Grant Thornton European Business Survey showed that the average time taken in the UK to settle accounts in 1997 was 49 days. By 2002 this had fallen to 41 days. By comparison, the average settlement time in our European neighbours was 50 days.
257WA recent survey by the REL Consultancy Group looked at average days payable outstanding (DPO) and concluded that UK companies' payment performance stands at a commendable 33.6 days against 42.4 days for Europe as a whole, whilrcountries such as Italy (67.9) and France (63.4) perform considerably less well.